HISD auditor questions student money collected at HSPVA

HOUSTON, Texas (KTRK) -- A Houston Independent School District audit found a non-profit booster club at one of its most prestigious magnet schools repeatedly violated district policy by collecting hundreds of thousands of dollars in revenue generated by school events since 2016.

Despite the auditor's recommendation that Kinder High School for the Performing and Visual Arts request reimbursement from HSPVA Friends, the district is taking no action and says in the audit report it is "not a problem" for the nonprofit to continue directly collecting revenue from ticket sales for school events.

The audit, released Monday, found HSPVA Friends was collecting all of the box office sales for student performances for years. Auditors write in the report they could not even determine how much money was at stake as, "neither the school administration nor the Friends provided it. We were not able to determine the reason[s] why."

HSPVA Friends is a nonprofit that is separate from the prestigious arts high school and school district.

The audit, which focuses on three years' worth of school activity funds dating back to the 2016-17 school year, doesn't say any improper spending was found, but does say the school has to rely on the outside group's word since the district has no right to audit or look at the nonprofit's financial records.

"HISD taxpayers, we built that brand new school downtown. We paid for [Kinder HSPVA's] 800-seat theater. We pay for the teachers that run it," said Sarah Terrell, a former HSPVA parent who has been raising concerns about funding since 2018. "Why in the world is someone else taking the revenues generated by that theater and then not being held accountable for how much money they grabbed through the internet [through ticket sales]."

The audit says "there should never be any confusion about the identity of the outside organization and the school" and that "the outside organization should not manage any part of the school's financial operations."

Yet, the findings say HSPVA Friends did violate HISD financial policies, and neither HSPVA nor HISD knows just how much was collected from box office sales.

Read the full audit here.

HISD did not address any of the audit's specific findings, but told 13 Investigates, "We are reviewing the recommendations in the audit and working to address the issues and implement best practices that serve our Kinder HSPVA students, staff and supporters."

Kinder HSVPA opened its $88 million, 168,000-square-foot, five-story facility in August. It has a 800-seat theater and holds student performances and events throughout the year.

The audit found that box office ticket sales go directly to HSPVA Friends and is thus an "improper collection of the performance tickets [box office sales]."

The auditor recommended the school request reimbursement from the nonprofit for ticket sales that occurred between July 1, 2016 and June 1, 2019, but the district said it would not take any action aside from directing district attorneys to write a memorandum of understanding between HISD and the Friends. The audit does not suggest the violated policy would be changed. It is also going to continue allowing HSPVA Friends to collect box office fees directly, rather requiring the school collect it.

"The Friends collected and managed the revenue generated from the school's performance tickets instead of HSPVA. Some events were graded as part of the academic performance. According to the Accounting Department, all 'graded events' and all revenue from student performances should be deposited into the activity fund accounts," the audit said. "However, when we asked for the revenue information, neither the school administration nor the Friends provided it. We were not able to determine the reason[s] why."

In a statement to 13 Investigates, HSPVA Friends Executive Director Alene Haehl Coggin said the nonprofit is proud of the support it provides Kinder HSPVA.

"Student fees and box office sales are spent on Kinder HSPVA programs," she said. "HSPVA Friends ensures that every student can fully participate in the specialized opportunities essential to an excellent arts education, regardless of their financial circumstances."

But, the audit notes "Kinder HSPVA did not properly and timely account for the [Fine Arts Program] activity funds that were collected by the Friends."

The audit shows the nonprofit has collected hundreds of thousands of dollars in visual art fees, field trip fees, performance fees, department fees and donations. Between 2016 and 2019, HSVPA collected more than $403,000, according to the audit.

The Friends kept $100,595 in fees and donations from last school year, and did not return the funds to Kinder HSPVA until Oct. 31, 2018, as a result of an investigation by HISD's Office of Ethics and Compliance, according to the audit.

"It's hundreds of thousands of dollars," said Terrell, who requested the district conduct the audit. "Friends decides how they will give it back to the school or what parts of the school - because obviously there are different fine arts programs within the school - which ones are going to get the benefit and to what extent. This is all decided by HSPVA friends and this is another way that they have, you know, in my opinion, too much influence and control at the school."

Other non-compliant activity mentioned in the audit includes improper processing of donations, improper use of certain funds, lack of imposing and collecting sales tax on taxable items, and lack of required approval for fundraising activities and donations.

"There was insufficient oversight for the activity funds that were collected by the Friends," the audit said. "And there was a lack of effective guidance regarding the Friends' involvement with the school to help manage the activity fund accounts and conduct non-school sponsored fundraising activities."

According to the audit, HSPVA's principal, who has been there for more than a decade, said he wasn't aware they were violating district policy. The auditor is recommending that the principal "attend activity funds training as soon as possible to help them to properly oversee their activity fund accounts."

The district is working on a "memorandum of understanding" which outlines how business should be handled between the district, the school and the nonprofit.

Coggin said the nonprofit is reviewing the audit and "will continue to work closely with HISD to fine-tune our processes."

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